Conservadorismo e rigidez na política monetária: uma estimativa da função de reação do BCB (2000-2007)

This paper aims at evaluating the conduction of monetary policy after the adoption of inflation targeting. Formation of Selic rate is modeled by estimating a reaction function of the BCB. Results show an excessive degree of interest rate smoothing and a high level of equilibrium interest rate. This evidence supports the belief that Selic rate's formation is ruled by a conservative behavior. The conservative conduction of monetary policy is related to two distinct features of BCB's reaction function: i) the great weight of autoregressive components; and, chiefly, ii) a very high level of the equilibrium interest rate. The main conclusion is that, all remaining unchanged, the interest rate would hardly be reduced in a satisfactory way. Massive and chronic deflation would be needed if Selic were to reach a reasonable level, closer to that of rates in the rest of the world. This evidences the need for a debate on the adequacy of current stabilization strategy.

The industrial equilibrium exchange rate in Brazil: an estimation

This paper presents a methodology for calculating the industrial equilibrium exchange rate, which is defined as the one enabling exporters of state-of-the-art manufactured goods to be competitive abroad. The first section highlights the causes and problems of overvalued exchange rates, particularly the Dutch disease issue, which is neutralized when the exchange rate strikes the industrial equilibrium level. This level is defined by the ratio between the unit labor cost in the country under consideration and in competing countries. Finally, the evolution of this exchange rate in the Brazilian economy is estimated.

The general equilibrium theory as economic metatheory

Many economists show certain nonconformity relative to the excessive mathematical formalization of economics. This stems from dissatisfaction with the old debate about the lack of correspondence between mainstream theoretical models and reality. Although we do not propose to settle this debate here, this article seeks to associate the mismatch of mathematized models with the reality of the adoption of the hypothetical-deductive method as reproduced by general equilibrium. We begin by defining the main benefits of the mathematization of economics. Secondly, we address traditional criticism leveled against it. We then focus on more recent criticism from Gillies (2005) and Bresser-Pereira (2008). Finally, we attempt to associate the reproduction of the hypothetical-deductive method with a metatheoretical process triggered by Debreu's general equilibrium theory. In this respect, we appropriate the ideas of Weintraub (2002), Punzo (1991), and mainly Woo (1986) to support our hypothesis.